(Bloomberg) -- The Venezuelan economist Francisco Rodriguez is willing to take his lumps on this one.
“I got it wrong,” he concedes about one of the wildest predictions of his career.
The widely-read economist from the boutique shop Torino Capital shocked investors and fellow Venezuela-watchers alike in February by forecasting that President Nicolas Maduro might actually lose the May 20 election. To many, the claim seemed ludicrous. The socialist regime was already accused of a litany of dirty tricks in past elections, and the main opposition coalition was vowing to boycott the vote. But Rodriguez was confident enough in his call -- that hyperinflation would send Venezuelans to the polls in droves -- he left Wall Street and joined as an adviser to Henri Falcon’s long-shot campaign to unseat Maduro.
That didn’t work out so well, with Falcon losing by 40 percentage points. Now, after missing out on the chance to become finance minister in an administration that would have aimed to put the country on a new course, Rodriguez is back as chief economist at Torino in New York. He needs to convince clients that one blown call shouldn’t unravel his prior reputation as often times one of the most insightful voices in the community of Venezuelan investors and analysts.
“I genuinely believed that Henri Falcon had a good chance of winning,” Rodriguez said in an interview. “What did I get wrong? I overestimated our capacity to convince voters not to participate in the boycott.”
Voters overwhelmingly stayed home, discouraged by their country’s grinding collapse and the view that Maduro would never let himself go down without rigging the vote. Now, two weeks after the autocrat cruised to victory, the 48-year-old Rodriguez says he has no regrets about joining Falcon on the campaign trail, but admits his prediction may have been influenced by his own desire for change in his country.
The Harvard-educated economist’s forecasting history hadn’t been spotless prior to this episode, of course. But his research reports, filled with hard-to-find data points, and his contrarian views -- namely his spot-on predictions that Hugo Chavez would handily be re-elected in 2012 and that the opposition would win a super majority in 2015 legislative elections -- made him a favorite among bond traders trying to determine whether or not Venezuela’s cash-strapped government could make good on the billions of dollars it owed creditors. The stakes were high for investors in this election. An upset victory by Falcon would have likely triggered a huge rally in Venezuela’s defaulted debt.
Rodriguez says maintaining credibility now means being transparent about his political ties and explaining to investors just how he managed to botch his last prediction so badly.
Rodriguez describes the campaign as underfunded, understaffed and lacking the organizational structure the opposition alliance spent years building. He also says the Falcon camp was completely blindsided by the outsider candidacy of Javier Bertucci, a televangelist and political newcomer who managed to win almost 10 percent of votes. The biggest factor, though, was that the movement to boycott the election was far more successful than Rodriguez imagined it would be.
Voter participation was about 46 percent, the lowest of a presidential election in Venezuela’s nearly six-decade-old democracy. Rodriguez says Maduro’s power seems even more entrenched now, and the economist expects him to make it through his six-year term.
Rodriguez stresses that he fully stepped away from Torino while he was aligned with Falcon and sought to avoid potential conflicts of interest. He wants his clients to understand that his faulty call and his decision to join the campaign both stemmed from patriotism.
“We’re not just analysts, we’re citizens of our countries and sometimes we want to do something for our countries,” he said.
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